Opinion - northwest_view

POSTED: Sunday, Sep. 27, 2009

Time for state to take outsourcing seriously

It's time for state government officials to - finally - get serious about contracting out state government services to the private sector.

The latest state revenue forecast cuts another $238 million hole in state revenue projections. Coupled with previous downturns in the forecast and rising demand for state services, the deficit for the 2009-11 state budget could be closer to $1 billion.

Given that bleak forecast, it's imperative that state officials find ways to cut expenses. One path is to reduce the state work force by contracting state services to private vendors.

First, a little history.

For years, state employee union leaders battled for collective bargaining rights in the state Legislature. They were shot down repeatedly by Republicans based on their philosophical belief that the Legislature, not the governor, should have salary-setting authority.

At the same time, Republicans lawmakers were pressing for more state services to be contracted out to the private sector. They were repeatedly torpedoed by Democrats.

Then political leaders hit upon a brilliant strategy: marry the two ideas into a single bill and each side would get a victory.

The Personnel Services Reform Act of 2002 gave state employees the right to bargain with the governor for wages and benefits. Business leaders got what they wanted -- the opportunity to compete for more of the state's business.

The third aspect of the bill was something state government managers wanted -- an overhaul of the state's cumbersome civil service rules which had not been changed significantly since they were adopted in the 1960s.

Union leaders began bargaining with the governor in 2004.

The Department of Personnel spent almost two years paring back the 2,400 job classifications in state government and changing the rules to allow managers to consider factors other than seniority when laying off and rehiring employees.

Officials at the state Department of General Administration, the state's landlord agency, went to work putting contracting rules in place.

While there has been steady progress on collective bargaining and civil service reform, contracting out has been mostly a bust. Little state work has been sent to the private sector in the intervening seven years since the bill was passed.

Part of the problem has been the ongoing objection of state employee union leaders who detest the rules on contracting adopted by General Administration. That was the subject of the recent lawsuit before the three judges in Division II of the Court of Appeals.

The judges noted that the 2002 legislation clearly permits state agencies to contract with private parties to perform work traditionally done by state civil service employees. The law is equally clear that employees whose positions or work would be displaced by a contract deserve an opportunity to offer alternatives to purchasing services via contract. If state managers reject the alternatives and decide to go proceed with a contract, employees can form an "employee business unit" and compete for the contract on the same footing as private entities. The law further states that if the employees are unsuccessful, the private entity awarded the contract must consider hiring the state employees who are losing their jobs.

In early 2006, the Washington Federation of State Employees challenged the contracting out rules adopted by General Administration. Union leaders said the rules limit the number of contracts employees could bid on by requiring the employees to first get their employer's permission before bidding.

General Administration officials refused to change the rules, and the governor declined the union's challenge.

Union leaders took their case to Thurston County Superior Court claiming that General Administration exceeded its rule-making authority, that the rules adopted by GA are contrary to the law and that the rules are arbitrary and capricious.

The trial court concluded that, indeed, the rules exceeded General Administration's rule-making authority.

Recently the three members of the Court of Appeals sided with the union and in effect set aside a portion of the rules adopted by General Administration.

So it's back to the drawing board.

It's imperative that new rules be adopted quickly so state government officials can get serious about contracting out state services. Yes, that's a threat to state workers, but they have the right to compete for the job along with the private sector. That's what lawmakers intended when they passed the reform legislation in 2002. A seven-year delay in getting a contracting out program fully in place is ridiculous.

This editorial reflects the opinion of the editorial board of The Olympian newspaper in Olympia.